Internet Legend Doug Humphrey and Sid Banerjee, CEO of Clarabridge Featured at Big Idea CONNECTpreneur Fall, 2014 Forum

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The next Big Idea CONNECTpreneur FORUM is coming up this Thursday, September 11, 2014 in Tysons Corner, Virginia.
 
Doug Humphrey, CEO of JETCO Research and Founder of DIGEX and Cidera, will moderate the Panel of Venture Capitalists and Angel Investors.
 
Sid Banerjee, Founder and CEO of Clarabridge, will talk about his company’s story, growth, and bright prospects for the future.
 
The Big Idea CONNECTpreneur Forums are quarterly gatherings of 300+ of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.
 

The event is regarded by many as “The Best Networking Event in DC.” InTheCapital calls CONNECTpreneur a “NETWORKING JACKPOT” of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.

CONNECTpreneur events are “essentially the be-all-end-all of networking events in the city” 

The “premier networking event in DC tech and investing”, CONNECTpreneur is “networking on steroids”

The Big Idea CONNECTpreneur Forum is a “Networking Jackpot.”

Presented by appnetic, Tech 2000 and LORE Systems, this UNIQUE EVENT is like NONE OTHER in our region, because of the high quality of its attendees, speakers and presenters.

And YES, the networking is unprecedented!

 
 
Program Highlights:
 
  • We expect 300 business leaders, includng 175+ CEOs & Founders, as well as 60+ angels & VCs
  • Conversation with Sid Banerjee, Co-Founder and CEO of CLARABRIDGE
  • All-Star Panel of INVESTORS
  • SHOWCASE of Emerging tech companies
  • Heavy NETWORKING before, during, and after the event
 
The venue is the Tysons Corner Marriott in Tyson’s Corner, Virginia.  A plated breakfast is included.  CONNECTpreneur is a quarterly networking mashup, which has been attended by over 2500 business leaders in the past 3 years. We expect another SELL OUT crowd, so there will be no on-site registration.
 
All attendees MUST BE pre-registered.  Register now!
 
 
And visit our Website.
 
 
DATE:  SEPTEMBER 11, 2014
 
AGENDA
 
7:00–8:15 am – REGISTRATION / NETWORKING
 
8:15 – 8:20 am – WELCOME
 
8:25 – 9:15 am – FIRESIDE CHAT with SID BANERJEE,Co-Founder and CEO of Clarabridge
 
9:15 – 10:15 am  –  COMPANY SHOWCASE
 

10:15 – 11:15 am –  ALL STAR INVESTOR PANEL:  LATEST TRENDS IN VENTURE CAPITAL AND EARLY STAGE FINANCING

 
Introductions: JEFF REID, Founding Director, Georgetown Entrepreneurship Initiative
 
Moderator:  DOUG HUMPHREY, Serial Entrepreneur, Angel Investor, Internet Pioneer, President of JETCO Research; Founder and CEO of DIGEX and CIDERA.
 
JOHN BURKE, General Partner, True Ventures
JIM PASTORIZA, Managing Partner, TDF Ventures
 
11:15 am – NETWORKING
 
 
EXPECTED INVESTOR PARTICIPANTS (partial list):
 
We expect 65+ angel and VC investors including Core Capital, Grotech, Novak Biddle, New Atlantic Ventures, Revolution Ventures, True Ventures, Edison Ventures, Amplifier Venture Partners, SWaN & Legend Venture Partners, RLMcCall Capital Partners, Multiplier Capital, Updata, Saratoga Investment Corp., DFW Capital Partners, Farragut Capital, NextGen Angels, CIT GAP Funds, New Markets Venture Partners, BluVenture Investors, Leeds Novamark, Maryland Venture Fund, TEDCO, 1776 / K Street Capital, Fortify Ventures, Acceleprise, US Boston, VentureCross Partners, Berman Enterprises, Dingman Center Angels, Neuberger & Co. Ventures, McLean Capital, Angel Venture Forum, Exhilirator, National Capital Companies, Enhanced Capital, MTECH Ventures, Mosaic Capital, Opus8, Starise Ventures, Blue Heron Capital, Duncaster Investments, Private Capital Network, Next-Stage Development Group, Lancaster Angel Network, Harrell Partners, Stanford Venture Advisors, MD Center for Entrepreneurship, Conscious Venture Labs, Great Falls Capital, Hafezi Capital, and Keiretsu Forum.
 
 
EVENT PARTNERS:
 
 
 
 
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Seth Goldman of Honest Tea headlines CONNECTpreneur Fall Forum

Seth Goldman, Co-Founder and TeaEO of Honest Tea

The Big Idea CONNECTpreneur FALL FORUM will be held on September 10, 2013 at the Tysons Corner Marriott in Tysons Corner, Virginia.

Seth Goldman, TeaEO of Honest Tea will do a fireside chat to discuss his new book, Mission in a Bottle: The Honest Guide to Doing Business Differently – and Succeeding.

The Big Idea CONNECTpreneur Forums are quarterly gatherings of 250+ of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.

InTheCapital says CONNECTpreneur events are “essentially the be-all-end-all of networking events in the city”

Presented by LORE Systems and Tech 2000, Inc., this UNIQUE EVENT is like NONE OTHER in our region, because of the high quality of our attendees, speakers and presenters.

Program Highlights:
  • We expect 250 business leaders, includng 150+ CEOs & Founders, as well as 60+ angels & VCs
  • Conversation and BOOK SIGNING with SETH GOLDMAN, Co-Founder and TeaEO of HONEST TEA
  • Attendees will receive a COMPLIMENTARY copy of Seth’s brand new book,Mission in a Bottle
  • All-Star Panel of INVESTORS
  • SHOWCASE of Emerging tech companies
  • Heavy NETWORKING before, during, and after the event
The venue is the Tysons Corner Marriott in Tyson’s Corner, Virginia.
A plated breakfast is included.
CONNECTpreneur is a quarterly networking mashup, which has been attended by over 1200 business leaders in the past 18 months.  This event promises to be our best one yet!
DATE:  SEPTEMBER 10, 2013
 
AGENDA
7:00–8:15 am – ARRIVAL / NETWORKING
8:15 – 8:20 am – WELCOME
S. TIEN WONG, CEO of Tech 2000, Inc. and Chairman of Lore Systems, Inc.
8:20 – 9:05 am – ALL STAR INVESTOR PANEL – “State of the Capital Markets”
 
MODERATOR:  JOHN BACKUS – Founder & Managing Partner, New Atlantic Ventures
 
EVAN BURFIELD – Managing Partner, K Street Capital; Co-Founder, 1776and Chairman, Startup DC
 
JOE BURKHART – Managing DIrector, Saratoga Investment Corp.
 
DOUG GILBERT – General Partner, DFW Capital Partners
9:05 – 10:15 am  –  COMPANY SHOWCASE
APPNETIC
CONSCIOUS VENTURE LAB
10:15 – 11:05 am – FIRESIDE CHAT with SETH GOLDMAN, Co-Founder and “TeaEO” of HONEST TEA;  Co-Author, MISSION IN A BOTTLE, The Honest Guide to Doing Business Differently – and Succeeding
11:05 – SETH GOLDMAN BOOK SIGNING and NETWORKING
Attendees will receive a complimentary copy of MISSION IN A BOTTLE
 
EXPECTED INVESTOR PARTICIPANTS (partial list):
We expect 60+ angel and VC investors including Grotech, Novak Biddle, Core Capital, New Atlantic Ventures, Edison Ventures, Updata, Saratoga Investment Corp., DFW Capital Partners, Farragut Capital, Revolution Ventures, CIT, New Markets Venture Partners, Leeds Novamark, Maryland Venture Fund, TEDCO, DFW Capital, BluVenture Investors, 1776 / K Street Capital, Acceleprise, US Boston, VentureCross Partners, Berman Enterprises, Dingman Center Angels, Neuberger & Co. Ventures, Saratoga Investment Corp., Multiplier Capital, McLean Capital, Angel Venture Forum, Endeavor DC, National Capital Companies, Enhanced Capital, MTECH Ventures, Mosaic Capital, Opus8, Starise Ventures, Blue Heron Capital, Duncaster Investments, Private Capital Network, Next-Stage Development Group, Lancaster Angel Network, Harrell Partners, Stanford Venture Advisors, MD Center for Entrepreneurship, Great Falls Capital, Hafezi Capital, and Keiretsu Forum.
EVENT PARTNERS:  
 

“The Best Networking Event in DC” – Big Idea CONNECTpreneur Summer Forum, June 6, Tysons Corner, VA

LORE SYSTEMS is pleased to host our quarterly Big Idea CONNECTpreneur Forum, one of the most exciting angel and entrepreneurship networking forums in the DC Region on June 6, 2011 at the Tower Club in Tysons Corner, VA.

InTheCapital calls this Forum “The Best Networking Event in DC.”

Please come out!  CLICK HERE to Register via the Eventbrite link.

EVENT IS NEARLY SOLD OUT!!

The Big Idea CONNECTpreneur Summer Forum is a “NETWORKING MASHUP” of 165+ of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.  Most of the attendees are “INVITATION ONLY,” and we are limiting service provider participation in order to maximize the experience for our Attendees and Sponsors.

Presented by LORE Systems, this UNIQUE EVENT is like NONE OTHER in our region, due to the high quality of our attendees and participants, as well as our program and unprecedented networking.

Come see what happens when you put a group of “A List” business leaders and entrepreneurs in one room for a few hours!

Program Highlights:
  • “TURBOCHARGING Entrepreneurship” Discussion
  • “ART OF THE PIVOT” with “UBER” technology entrepreneur Reggie Aggarwal of CVENT
  • 9 Emerging tech companies seeking funding will briefly tell their stories
  • Networking sessions before, during, and after the event
The venue is the Tower Club in Tyson’s Corner, Northern Virginia’s premier private business club.  A plated breakfast and unlimited coffee are included.
AGENDA
7:00–8:00 am – ARRIVAL / NETWORKING

8:00 – 8:05 am – WELCOME

8:05 – 8:45 am – SESSION 1 – “TURBOCHARGING ENTREPRENEURSHIP IN THE DC REGION” with Uber entrepreneur and angel investor Doug Humphrey, CEO and Founder, CIDERA;  Co-Founder, DIGEX

8:45 – 9:20 am  –  SESSION 2 – “THE ART OF THE PIVOT” with Uber entrepreneur Reggie Aggarwal, Founder and CEO of CVENT
9:20 – 9:45 am – NETWORKING BREAK
9:45 – 11:30 am – SESSION 3 – COMPANY PRESENTATIONS (all confirmed)
AthleticMD
DeviceCloudNetworks
Glimpulse
HITCH
11:30 am – NETWORKING (ATRIUM)
EVENT SPONSORS:  

Persistence and Commitment at HONEST TEA, a guest post by Marissa Levin

Guest Blog Post from Marissa Levin, CEO of Information Experts and Founder of Successful Culture, a new business dedicated to helping entrepreneurs and business leaders build successful cultures within their organizations.

Marissa was a guest at Lore Systems’ Big Idea CONNECTpreneur Spring Forum on March 7, 2012 and Seth Goldman, Co-Founder and TeaEO of Honest Tea, was one of our featured speakers on the “Entrepreneurship with a Higher Purpose” panel.

This post was written on March 13, 2012 and can be found on Marissa’s awesome new Blog, Successful Culture.

Honest Tea CEO Seth Goldman Takes Persistence & A Commitment to Mission to New Heights

Imagine pitching your idea to 1,000 investors. Over and over and over again. A little insane, right? Not if you’re Seth Goldman, TeaEO of Honest Tea. When we think of Honest Tea, we think of a delicious beverage, and a wildly successful business.

Dig a little deeper into the roots of Honest Tea, and you’ll discover an entrepreneur who is forever committed to the mission of “changing the way people eat, drink, think and live.”

Seth shared the struggles of his early days with 300 business leaders at the sold-out ConnectPreneur Event in the DC region, architected by global serial entrepreneur and angel investor Tien Wong, CEO of Lore Systems (www.lore.net).

Building an Empire One Brick at a Time

As a bootstrapped entrepreneur who has never sought outside funding, I was amazed at Seth’s relentless quest for angel investments when he launched Honest Tea. “I did over 1,000 pitches and landed 120 angel investors. I took $25,000 at a time,” Goldman said. “There were plenty of times when I was financially out of business. But you need just enough fumes to keep things going.”

The question on everyone’s mind – which was asked – was, “How did you keep going?” All entrepreneurs seek the answer to this question from others that travel the path of business ownership. What is the magic bullet -the secret sauce – that gives us the strength to keep pushing when we are seemingly out of options?

Always Return to the Mission

“What kept me going is I always believed and still believe in my mission. I believe we have to change the way we eat, drink, think, and live. Quitting was never an option.”

In addition to the initial 1,000+ calls, Goldman had to ruthlessly follow up with potential investors. Follow-up apparently is just as important as the initial contact.

“You need to be ruthless with your follow-up. You can’t ever quit. Your follow-up is a good indication of your commitment to what you are trying to build, and to your work ethic. Some we talked to for years before they came on,” he said.

Seth’s tenacity is an inspiration to anyone trying to make their entrepreneurial mark. Equally inspiring is his commitment to his core values, and his refusal to relinquish what matters most to him – providing healthy products that consumers feel good about drinking.

Coca-Cola now owns 40% of Honest Tea. The mammoth company’s management is like a bull in a china shop. This, however, doesn’t sway Goldman from his values. “Coca-Cola wanted me to remove “No High Fructose Corn Syrup!” from our labels. I asked if this was a legal or regulatory requirement, and it wasn’t,” he explained.

Goldman continued, “Because their products contain this ingredient, our label wasn’t a positive reflection of their brand. I refused to remove it it. The discussion made its way to the very top of the executive ladder, and I refused.”

Finally, Coca-Cola relented, and conceded that as a minority owner, they couldn’t force Honest Tea to remove the labeling.

All Natural Ingredients for Successful Entrepreneurship

Goldman boiled successful entrepreneurship down to the two basic tenets that we all inherently know: 1: A steadfast, laser-focused, driven commitment to what we are building, in which we will do whatever we need to succeed, and 2: A passionate belief in the change we are trying to make.

Thanks to Tien Wong (follow him on Twitter: @tienwong, and subscribe to his blog – Winning Ideas at (https://tienwong.wordpress.com/) for helping to quench the entrepreneurial thirst for learning with a great event!

And thanks to Seth Goldman (@HonestTea) for showing us what happens when you never ever ever ever ever give up.

Patience, persistence and perspiration make an unbeatable combination for success.” ~Napoleon Hill

Big Idea CONNECTpreneur Spring Forum, March 7, Tysons Corner, VA

LORE SYSTEMS is pleased to host one of the most exciting angel and entrepreneurship networking forums in the DC Region on March 7, 2011 at the Tower Club in Tysons Corner, VA.

Please come out!  Here’s the Eventbrite link:  http://connectpreneur1.eventbrite.com

The Big Idea CONNECTpreneur Spring Forum is a 1/2 day “NETWORKING MASHUP” of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.

Come see what happens when you put a group of “A List” business leaders and entrepreneurs in one room for a few hours!

This UNIQUE EVENT is like NONE OTHER in our region, due to the high quality of our attendees and participants, as well as our programming and unprecedented networking.

The Big Idea CONNECTpreneur Forum is an exclusive “mashup” of 170+ of the DC Region’s top entrepreneurs, business leaders, CXOs, angels and VCs.
Most of the attendees are “INVITATION ONLY,” and we are limiting service provider participation in order to maximize the experience for our Attendees and Sponsors.
Program Highlights:
  • “Hypergrowth – Zero to $500 million in 8 years” discussion
  • “Entrepreneurs with a Higher Purpose” panel
  • 8 Emerging companies seeking funding will briefly tell their stories
  • “Disruption, Disintermediation, and Destruction” luncheon discussion
  • Networking sessions before, during, and after the event
The venue is the Tower Club in Tyson’s Corner, Northern Virginia’s premier private business club.  A plated brealkfast and plated lunch are included.
AGENDA7:00–8:00 am – ARRIVAL / BREAKFAST / NETWORKING

8:00 – 8:05 am – WELCOME

8:05 – 8:45 am –  “HYPERGROWTH – ZERO TO $500 MILLION IN 8 YEARS!” – a conversation with Tony Jimenez, Founder and CEO of MicroTech
8:45 – 9:30 am  –  “ENTREPRENEURSHIP WITH A HIGHER PURPOSE”
Jim Cheng, Secretary of Commerce, Commonwealth of VA; Founder and CEO, Computer Hi-Tech Mgt, “Entrepreneur Turned Public Servant”
Dr. John Holaday, CEO, QRx Pharma, an ex-Army officer, Professor, and serial entrepreneur who has founded and taken 3 companies public, “Entrepreneur Seeking a Cure for Cancer”
Seth Goldman, Founder and TeaEO, Honest Tea, beverage industry innovator, “Entrepreneur  leading the Green Movement”
9:30 – 9:45 am – NETWORKING BREAK
9:45 – 11:30 am – COMPANY PRESENTATIONS
Fresh Tax
Pixspan
11:30 – 11:45 am – NETWORKING BREAK
11:45 – 1:15 pm – LUNCHEON DISCUSSION – “DISRUPTION, DISINTERMEDIATION, AND DESTRUCTION”
Duke Chung, Founder of Parature, CRM industry pioneer
Mark Walsh, Founder and CEO, GeniusRocket;  Chairman, DIngman Center for Entrepreneurship;  Chairman of the Board of Trustees, Union College;  Founder and CEO, VerticalNet
John Backus, Managing Partner of New Atlantic Ventures, Founder of Draper Atlantic Venture Fund, former CEO, InteliData
1:15 pm – MORE NETWORKING AND DEALMAKING
CONFIRMED PARTICIPANTS (partial list):
Over 110 Entrepreneurs and CXOs, plus another 40+ angels and VCs including Core Capital, Novak Biddle, New Atlantic Ventures, CIT, Capital Source, NEA, Maryland Venture Fund, MAVA, MTECH Ventures, Maryland DBED, Ruxton Ventures, Opus8, VentureCross Partners, McLean Capital, National Capital, Starise Ventures, Dingman Center Angels, Blu Venture Partners, Blue Heron, Washingon DC Archangels, Fortify.vc, Endeavor DC, Private Capital Network, APPTEL, Stanford Venture Advisors, MD Center for Entrepreneurship, SunWalker Group, Skada Capital, Keiretsu Forum, CADRE.
EVENT SPONSORS:  


12 Most Critical Questions for Raising Capital for Your Startup – 12most.com Guest Post

Stack of 100s at 12most.com

This was my August 16, 2011 Guest Post on 12most.com.

Right now – RIGHT now – is the BEST TIME to start a business, and there’s never been a better time to start raising capital. I firmly believe this. Why?  Because tough economic times cause tremendous dislocation in almost every market. Established companies are playing defense, trying to figure out where the economy is heading, laying off people, cutting costs, and trying to protect their turf. Fear is in the air.

Fear spells opportunity for new startups that can compete because they are small, nimble and agile.  Using creativity and resourcefulness, entrepreneurial startups can improve the way things have been done in the past, or attack brand new markets with new technology.  Startups are not encumbered by the baggage of their larger competitors.

However, raising money in tough economic times is, well, tough!  Angels and VCs seek to cherry pick the very best ideas, those that are most likely to succeed.  Money is still available for the best ideas and teams, but you have to be tuned in to what these investors need in order to make an investment in your startup.

Based on my experience as an entrepreneur, mentor, angel, VC fund LP, and board member, here are the 12 most important questions you need to answer when raising capital for your startup:

1. Money

How much do you need and what is the use of funds?

Investors want to know that you have thought through your capital requirements and where the money will be put to use.  Is it for product development, marketing, building out your sales team, etc.?  You must be ready to justify this request, and talk about how this gets you to the next stage in your startup’s development, as well as how much more money you may need in the future.  Know what kind of deal structure (preferred stock, convertible debenture, common stock, etc.) and valuation you are proposing to your investors.

2. Pain – What pain are you fixing?

Your product or solution must fix somebody’s pain, whether it’s making life easier, saving money, or making a customer more efficient.  Talk about the severity of the pain you are addressing, as well as how much money your customer will pay for it.  Show some basic market research, ROI analyses, and, ideally some 3rd party customers who are already happily using your product or service.

3. Raising Capital for Your Solution: What is it, exactly?

Exactly what product or service are you offering and how does it work?  Too many times, I have seen wishy washy descriptions of the solution because the idea is being matured, or in Alpha mode.  I have seen many super smart engineers with grand plans that are completely unfocused trying to be everything to everybody. Few have been funded.   Investors want to see certainty and simplicity in your proposed solution to the above-mentioned pain.

4. Customers – Who, exactly, is your customer?

You need to know WHO will be buying from you.  Are you selling B2B, B2C, B2G, all of the above?  Are your targets Fortune 500 companies, SMBs, NGOs, the Federal government, etc.  At what level are you selling (CEO, CFO, VP of Marketing, etc.)?  What kinds of situations will they need to be in to absolutely must buy from you?  The more precise the better.  And bring some testimonials or anecdotal evidence from these targets.

5. Execution Plan – What’s your plan for selling and delivering?

One of the biggest questions and concerns investors have is HOW you plan to win customers.  What’s your strategy, who’s leading the sales effort, and so on. Be prepared to discuss not only your marketing & sales plans and customer acquisition strategy, but also your customer retention strategy.

The Angel on Your Shoulder

6. Raising Capital, as a Team – Who are the players and what are their backgrounds?

Angel investors are not only investing in an idea or a market space.  We are investing in a team of people with, preferably, a strong and experienced founder.  Talk about your key executives and your advisors too (lawyers, accountants, Advisory Board members), anyone who is adding considerable value to your venture.

7. Culture – What kind of culture are you building?

Culture is the DNA of every organization, and good culture is a requirement for success.  Culture can even be a differentiator against your competition.  The best investors know this.  Talk about your culture, your approach and philosophy towards business operations, leadership development, hiring, customer care, product development, and other key parts of your business.

8. Competitors – Who are they and how will you compete?

Competition is one of the most important questions to answer.  I have met with countless entrepreneurs who claim that they have “no competition.”  This is a particular pet peeve of mine, because every company has competitors, and all customers have choice.  Believing that you don’t have competitors is not only naive, it is a recipe for disaster.  So talk about all your competitors, both direct and indirect, and show how you are better and how you will beat them.

9. “Moats” – How are you special and what are your differentiators?

Warren Buffett likes to invest in companies with high barriers to entry, or “moats,” as he calls them.  Startups are risky enough for investors, and they want to invest in ventures which have a higher probability of success.  Moats include IP, patents, unique skills or knowledge, proprietary methods, unique brands, unique culture, etc.

10. Raising Capital for Pivotability – What will you do if your Plan “A” fails?

One thing is absolutely certain in a startup: your original plan will not happen the way you initially envisioned it.  Investors want a team that’s resourceful, agile, and creative enough to pivot, if necessary.  A sailboat in a regatta does not go from Point A to Point B in a straight line.  It gets there by “tacking, ” or making a series of rapid and opportunistic turns in order to maximize the wind in its sails.  Startups have to do the same thing, and investors want to see that you have thought through your contingency plans.

11. Commitment – How much money did you personally invest? Is this a full time job for you?

The best investors take a “partner” approach to investing, and they want to invest alongside their entrepreneurs.  I’m not so much looking for huge sums of cash invested, but rather whether the amount invested is a “significant” percentage of the entrepreneur’s net worth.  If a founder has put a good chuck of her net worth into the company, or taken out a second mortgage on her home, the investor will feel more comfortable about the founder’s putting her money where her mouth is.  As for working “full time,” this is essential.  I have never seen a startup succeed that didn’t have full time (80 hours a week) commitment from its founding team.  Be ready to field questions about how much your team is willing to sacrifice in order to win.

12. Exit – How are you going to make your investors money?

Investors are not looking to put their money in forever.  You have to paint the picture of how they will get their money and profits out within their expected timeframe (generally 4-7 years).  Be ready to talk about how you’re going to exit (for example via IPO, sale, recap, or refi).  How is the market for your proposed exit options?  Talk about recent deals in your space and get some data from the experts (M&A specialists, deal lawyers, etc.).

I hope this helps you as you think through your approach to pitching angels and VCs.  If you believe in your startup, then be persistent. Don’t give up!  If you can’t get funded initially, then prove out your business model by getting traction, i.e. happy customers, and figuring out other creative ways to raise the capital you need, whether it’s by getting equipment leases, vendor financing, customer deposits, or even money from “FF&F” (friends, family and fools).

Good luck out there!  It’s a great time to pursue your dreams!

Photo courtesy of amagill. Some rights reserved; used under creative commons license.

Scaling a Hypergrowth Enterprise – Part 5 of 5 (Capital)

photo

This is the 5th and final installment in my 5-part series on the five elements of Elements of Scaling a hypergrowth enterprise.  I was the co-founder and CEO of CyberRep, a hypergrowth CRM and call center enterprise which grew annual revenues from $500,000 to over $1.6 billion over a 17 year period.   That’s revenue growth of 320,000% (3200x).

So what are the 5 elements of scaling a hypergrowth company?  Part 1 of this series talks about PeoplePart 2 discusses Culture, Part 3 examines Scalable Customers, and Part 4 delves into Process.  The 5th element is Capital, which is the necessary fuel that every hypergrowth company must have.

While many startups can be bootstrapped with limited capital, the Hypergrowth Enterprise absolutely needs capital.  In order to put in place the foundation for hypergrowth, you need the money to build and perfect your product or service, to hire your awesome talent, and for working capital as you book revenue.

Two Essentials for Raising money are to 1.  Raise money from a Partner, not just an investor and 2.  Raise more than you need, but not too much.

THE INVESTOR PARTNER

To fuel our growth, we raised $20 million in mezzanine capital (subordinated debt with warrants) and $1 million in equity from one partner, Allied Capital, a Washington, DC-based, publicly traded business developement company (BDC).  We did 3 separate rounds over a 4 year period for expansion of facilities, working capital, and the acquisition of 2 complementary targets.  We had multiple term sheets from VCs, mezz investors, and private equity firms.  We chose Allied because, in our opinion, they were more than a capital source, they were a Partner.

A Partner has Deep Pockets – Our partner had a $5 billion portfolio with an average deal size north of $20 million.  While we only raised $4 million in our initial round, we knew we would need to go back to the investor for more money as we grew.  Therefore, we needed a partner who woud readily put more capital into our business.  Raising money is VERY time consuming and disruptive to your business, so by having a deep-pocketed Partner who could fund additional rounds quickly, we avoided having to spend tons of time shopping for new investors for our 2nd and 3rd rounds of funding.

A Partner Understands Your Space – Having made numerous investments in the business services and information services space, including a company directly in our space, our partner brought to us expertise and experience which, inside and outside of the boardroom, proved to be very valuable.  If your investor knows your space deeply, they won’t waste your time with stupid questions and uninformed opinions. Instead, they can focus on the nuances of your industry and add true value.

A Partner Has Operational Experience – Our partner owned outright many of the companies in their investment portfolio. As the owner of these businesses, they had an operational focus on all of their portfolio companies including ours. This was invaluable to us, as we were quite inexperienced and needed all the help and guidance we could get. Too many professional investors have no operating experience, and have never had to hire people, fire people, make a payroll, or close a sale.  Lack of practical experence puts these investors at a disadvantage and, worse, the advice they give you could put you out of business!  Conversely, professional investors who have started and built companies are the best kinds of partners to have because they can share their knowledge and experience with you. They know firsthand how super hard it is to build a business from zero, and they can relate better to you.

HOW MUCH MONEY SHOULD YOU RAISE?

Raise more than you need, but not too much.  What do I mean by this? Whatever amount you think you need to raise, raise a little more.  I know I am generalizing, but in the VAST majority of requests I see, the entrepreneur does not ask for enough money.  Who knows why.  Maybe she’s trying to minimize dilution, or maybe she thinks this current round gets her to a milestone where she can get a higher valuation with the next round.

Regardless, the key thing to keep in mind is that capital is the FUEL for your growth.  If you’re driving from New York City to DC, do you fuel up your car every 50 miles, or do you put enough fuel in your tank to make the entire trip?  Same thing with raising money for your growth.  Be less concerned about dilution and equity give-up and more concerned about having the fuel to reach your destination.  Raising money is a big distraction from company operations, and it’s a real time killer.  Founders need to be focused on wowing their customers and building an amazing team, NOT being in constant fundraising mode.

So how much do you really need?  Think through your scenarios, be conservative on your projections (sales always take longer than you think), and get advice from seasoned pros and advisers as to the appropriate amount.

As for raising TOO MUCH money, this is also a problem.  Why?  Because having the security of a fat bank account can make a startup SOFT and too comfortable. They lose their edge, the bootstrap mentality which is necessary for creativity, scrappiness, and resourcefulness.  Look at all the Dot Com failures that raised too much money, and then wasted it on pricey office space, expensive furniture, ridiculous marketing, etc. because they couldn’t find a better use for that precious resource.  They got soft, then couldn’t be self sufficient when the VC market dried up.

So….raise more money than you need, but not too much.

Thanks very much for reading.  I hope this 5-part series was informative.  What do you think?  I’d love your feedback and thoughts, so please Comment below…and please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)

Featured image courtesy of Asthma Helper licensed via creative commons.